Australian small businesses using fintech solutions generated $9billion in economic benefits, according to a new report from FinTech Australia, the member-driven organisation supporting the development and adoption of fintech, which urges broader fintech adoption to foster further growth.
In its first major report exploring the tangible impact the fintech industry is having on the country’s economy and business across Australia, FinTech Australia revealed that over half (56 per cent) of small businesses leverage a fintech provider for in-person transactions. Meanwhile, a similar number (57 per cent) of regional small businesses also leverage fintech payment solutions for payments over their major bank counterparts.
The organisation also found that small businesses have been among the biggest beneficiaries of the transition to fintech-powered modern payment systems, with the average benefits across all fintech solutions totalling $9billion as a result of their adoption.
Created in partnership with economics, research and analysis firm Mandala, the new report details that, of this $9billion in net benefits, $8billion has come from increased revenues by adopting the services, and $1billion from reducing costs. It says that over 30 per cent of businesses reported growth of over 2.5 per cent after adopting a fintech payment solution.
“This report finally quantifies the power of fintech to transform our economy,” explained Rehan D’Almeida, CEO of FinTech Australia. “We frequently hear that small business is the engine room of the Australian economy. Well, fintech is fuelling that engine room and directly contributing to its growth.
“Through adopting new payment technologies, small businesses are not only reducing costs, which is what we expected, but are also growing their revenue. Its impact isn’t fully realised either, with only half of Australian small businesses leveraging these fintech solutions. With support, we can see fintech supercharge more areas of the small business ecosystem, further growing overall revenues and reducing costs.”
The findings come as part of the new report launched by economics, research and analysis firm Mandala in partnership with FinTech Australia, compiled using fresh research into small business and analysis of ABS data.
Identifying challenges to further growth
In addition to measuring its impact, the report also noted the key factors holding back broader fintech payment adoption: namely businesses’ concerns about perceived operational cost, security and privacy.
D’Almeida added: “In many instances, fintech solutions are safer and more operationally efficient than their counterparts. The data indicates that our key challenge for further growth is educating the broader SMB market.”
The report launches amid the RBA’s review of surcharging, where various data points from the Mandala report formed the basis for FinTech Australia’s submission.
“While the surcharging model isn’t perfect, small businesses have built their businesses around these surcharging rules for two decades and would be disproportionately impacted by a ban,” D’Almeida said.
“We want to help the government get the balance right, and help make other digital surcharge-free methods of payment available to consumers. The surface-level solution of banning surcharging would be a heavy blow to small businesses, have knock-on effects for consumers, and undo the benefits the fintech sector is providing the overall economy.”
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